Non-disclosure of the amount of commissions paid in respect of a PPI policy made the creditor’s relationship with the debtor unfair and justified reopening the transaction under s 140A CCA 1974. The decision in Harrison v Black Horse Ltd (2012) that the relationship could not be unfair if the creditor had not breached duties imposed by the ICOB regulatory regime, was wrong. A wider range of considerations may be relevant to the fairness of the relationship including the characteristics of the borrower. It is a question of degree. Here the commissions were so large that the customer should not have been kept in ignorance. The creditor was responsible for making the relationship unfair by failing to disclose the size of the commissions. The creditor had no regulatory or other duty to assess the borrower’s needs. Although s 140A also covered things done on behalf of the creditor, this requires agency to be established and the independent broker could not be regarded as the creditor’s agent.

In selling a PPI policy with a loan, the lender failed to explain that the entire PPI premium was to be paid in advance. The borrower was misled into thinking that the premium was merely paid over the term of the loan and did not give rise to additional borrowing. The lender had therefore acted in breach of the requirement of ICOB 2.2.3(1)R to communicate in a way that is fair, clear and not misleading. The fact that the loan documentation did make the position clear was not enough to break the chain of causation because the misleading explanation had caused the borrower not to bother to read the detail in the documents which followed the misleading explanation.